Under an earnings approach to accounting for revenues, the main focus is placed on
A)the creation of contractual rights of the underlying sales agreement.
B)the adherence to relevant contractual obligations.
C)the earnings process itself and how value is added.
D)the presentation on the financial statements.

Question

Quizplus · Accepted Answer

Under an earnings approach, the focus is on the earnings process itself and how value is added, rather than just the creation of contractual rights or adherence to obligations. This approach takes into account the timing of revenue recognition based on when it is earned, rather than received or when contractual obligations are fulfilled. The presentation on financial statements is important, but is not the main focus of the earnings approach.

Under an Earnings Approach to Accounting for Revenues, the Main